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GIFT  OF 


The  Anti-Trust  Laws 
Special  Reference  to  the  Mennen  Co.  Decision 
The  Hardwood  Lumber  Decision 
And  the  Edge  Resolution 


An  Address  hy 

FELIX  H.  LEVY 

Of  the  New  York  Bar 
Former  Special  Counsel  to  Dept.  of  Justice 


Delivered  Before  the 

AMERICAN  SUPPLY  &  MACHINERY 

MANUFACTURERS  ASSOCIATION 

At  Its  Annual  Convention 


Held  at 
Atlantic  City^  N.  J. 
May  9,  1922. 


/J-0  3.-77  ^ 


Gift 


THE  ANTI  TRUST  LAWS,  WITH  SPECIAL  REFERENCE 
TO  THE  MENNEN  CO.  DECISION,  THE  HARDWOOD 
LUMBER  DECISION,  AND  THE  EDGE  RESOLUTION. 

Mr.  Chairman  and  members  of  the  Convention:  I  desire 
at  the  outset  to  express  my  appreciation  and  thanks  for  the 
privilege  involved  in  your  invitation  to  appear  before  you  to- 
day. Upon  the  courteous  suggestion  of  your  Secretary,  Mr. 
Mitchell,  I  came  here  from'  New  York  a  day  or  two  in  advance 
of  the  time  set  for  my  address.  The  result  has  been  that  I 
have  been  able  to  mingle  with  you  and  to  listen  yesterday,  with 
more  than  ordinary  interest,  to  the  proceedings  of  your  Con- 
vention so  that,  if  I  may  say  so,  I  feel  in  a  certain  sense  like 
one  of  your  number  rather  than  like  a  stranger  from  without 
the  gates. 

I  also  had  the  opportunity  of  reading  the  stenographer's 
transcript  of  the  proceedings  of  your  recent  Birmingham  Con- 
vention, and  I  hope  you  will  believe  that  I  say  it  not  in  idle 
words  of  flattery  but  with  sincerity  and  as  an  observer  outside 
of  your  own  field  of  combat,  who  perhaps  therefore  can  get  a 
better  perspective,  that  I  have  rarely  read  anything  of  more 
genuine  interest  than  the  proceedings  of  that  Convention. 

I  listened  yesterday  with  great  interest  not  merely  to 
the  general  proceedings  of  your  Convention,  but  also  to  the 
eloquent  and  inspiring  address  by  Captain  Gorby  on  ^'optim- 
ism". And  then,  when  I  reflected  on  the  proceedings  of  your 
Birmingham  Convention  and,  without  making  invidious  com- 
parisons, bore  in  mind  the  masterly  presentation  of  various 
topics  affecting  not  merely  your  own  industry  but  also  the 
country  at  large,  by  your  President,  Mr.  Gladding,  and  the 
scholarly  and  statesmanlike  speech  made  by  Mr.  Williams,  I 
felt  like  adding  to  the  catalogue  pronounced  by  Captain  Gorby 
of  the  elements  and  items  which  ought  to  make  us  all  optimistic, 
the  further  element  that  a  country  which  possesses  an  industry 
like  yours,  containing  men  of  the  marked  talents  and  vision 
shown  by  Mr.  Gladding  and  Mr.  Williams  and  by  many  others 


53953^ 


of  your  membership,  that  a  country  possessing  such  men  need 
not  fear  for  its  future. 

If  the  majority  of  the  members  of  the  two  houses  of 
Congress,  were  customarily  men  of  the  business  experience 
and  acumen  and  of  the  vision  and  foresight  of  men  like  Mr. 
Gladding  and  Mr.  Williams,  the  welfare  of  our  country  would 
be  greatly  promoted. 

The  gentlemen  whom  I  have  thus  named,  leaders  in  your 
industry,  are  but  types  of  the  forceful, .  aggressive  and  far- 
sighted  men  who  are  to  be  found  in  every  kind  of  industrial 
activity  in  this  country.  Are  our  business  men — endowed  as 
they  are  with  rare  gifts  of  energy,  initiative  and  vision — free 
to  use  their  talents  without  hindrance?  They  are  not,  for, 
aa  I  shall  endeavor  to  demonstrate  (to  you  today,  they  are 
shackled  and  fettered  by  antiquated  and  out-worn  legal 
doctrines  which  have  long  ago  been  abandoned  by  Great 
Britain  and  by  all  other  civilized  countries.  I  refer  to  the 
ancient  common-law  doctrine  known  as  "restraint  of  trade", 
a  doctrine  born  in  England  centuries  ago  to  meet  conditions 
then  existing  but  now  utterly  changed. 

In  England,  with  a  system  of  jurisprudence  vastly  superior 
to  our  own,  the  changed  conditions  of  modern  business  have 
progressively  brought  about  an  amelioration  of  this  ancient 
legal  principle,  so  that  today  it  rests  very  lightly  upon  the 
shoulders  of  British  industry;  whereas  in  this  country  it  re- 
tains, virtually  without  change,  its  old-time  rigor,  to  the  great 
detriment,  as  I  shall  endeavor  to  show,  of  our  trade  and  com- 
merce. 

Economists  who  have  studied  the  subject,  maintain  that 
the  greatest  obstacle  and  hindrance  to  the  legitimate  exercise 
of  their  natural  powers  and  capabilities  by  the  business  men 
of  our  country,  is  to  be  found  in  our  own  laws,  framed  by  our 
own  servants,  interpreted  and  enforced  by  our  own  ofiScials. 
For  such  is  the  situation  which  the  Anti-Trust  Laws  of  the 
United  States  have  created  as  a  result  of  a  grave  and  funda- 
mental misconception  which  has  befallen  those  laws. 

I  shall  devote  a  brief  part  of  your  time  to  a  discussion  of 
the  history  and  the  evolution  of  the  Sherman, Law. 

It  was  passed  in  1890  for  a  definite,  distinct  and  exact 
purpose.     It  was  passed  in  order  to  disrupt,  and  prevent  the 


recurrence  of,  great  trusts — the  whiskey  trust,  the  oil  trust, 
the  sugar  trust,  and  the  like.  The  debates  in  Congress  indis- 
putably show  that  to  be  the  only  purpose  for  which  the  Sher- 
man Law  was  enacted.  To  a  substantial  extent  it  has  per- 
formed that  duty.  In  breaking  up,  ineffectually,  the  oil  trust 
and  the  tobacco  trust,  the  Sherman  Law  was  not  at  fault,  but 
the  officials  were  at  fault  who  permitted  farcical  dissolutions 
of  those  trusts — dissolutions  which  resulted  in  the  greater 
enrichment  of  the  owners  of  those  monopolies,  but  in  little  or 
no  benefit  to  the  public.  But  that  is  not  a  criticism  of  the 
Sherman  Law.  Court  decisions  without  number  show,  on  the 
contrary,  that  it  has  performed,  in  a  very  substantial  degree, 
the  purpose  for  which  that  law  was  enacted. 

But  when  we  examine  the  subject  further,  what  do  we 
find  ?  We  find  that  the  operation  of  that  law  has  been  extended 
far  (beyond  its  original  purpose  of  breaking  up  these  great 
combinations  which  did  so  much  harm.  They  did  great  harm, 
indeed.  They  did  things  which  were  oppressive  and  wicked 
and,  as  Mr.  Chief  Justice  Taft  once  said,  it  would  "miake  you 
choke"  to  think  that  men  would  do  to  others  what  the  con- 
ductors of  those  great  trusts  did  to  their  small  rivals.  The 
result  was  that  the  people  of  this  country  were  so  inflamed, 
their  righteous  indignation  was  so  aroused,  that  it  has  not  yet 
cooled  off  and  they  have  permitted  that  law  to  be  extended  to 
the  multitudinous  details  of  daily  business,  so  that  there  is 
scarcely  an  act  that  a^erchant  or  a  manufacturer  can  do  by 
way  of  concert  with  his  competitor,  which  is  lawful.  As  every- 
one knows,  it  prohibits  the  discussion  of  price  agreements.  You 
would  be  just  as  indictable  for  making  a  price  agreement,  or 
an  agreement  to  prevent  overlapping  of  territory,  as  if,  by 
way  of  illustration,  you  committed  arson.  It  is  a  crime  in  the 
one  instance  and  in  the  other. 

A  speaker  who  preceded  me  at  your  Convention,  said  that 
this  is  "the  most  governed  and  the  worst  governed  country  on 
earth".  I  adopt  his  phrase  as  a  basis  for  saying  that  there 
is  not  a  country  on  earth  that  has  a  law  which  is  interpreted  as 
is  our  Sherman  Law.  I  took  the  trouble  before  I  came  here  to 
look  up  the  laws  of  England  on  this  subject.  Now,  I  think 
England  is  a  pretty  good  example  with  respect  to  industrial 
matters.  Napoleon  called  it  a  nation  of  shop-keepers  and 
Britain  is  proud  of  the  appellation.     I  believe  the  controlling 


thought  of  Lloyd  George  at  Genoa  today  is  the  restoration  of 
trade  activity,  because  that  is  the  mainspring  of  the  life  of 
nations. 

The  decisions  of  the  English  Courts  are  plainly  to  the 
effect  that  cooperative  activities  of  business  competitors,  which 
are  declared  unlawful  by  our  Sherman  Law,  are  entirely  law- 
ful in  England.  Striking  confirmation  of  this  fact  is  furnished 
by  the  definition  or  description  of  trade  associations  given 
in  the  ''Encyclopaedia  Brittanica",  as  showing  the  functions 
of  such  associations  in  England.  It  is  stated  in  these  words : — 
"Those  which  are  themselves  engaged  in  trade,  .... 
or  which  result  from  the  combination  of  firms  or  individuals 
in  the  same  or  connected  trades,  for  the  purpose  of  facilitating 
or  restricting  Ipjroduction,  limiting  cofmpetition,  regula^ting 
prices,  etc.".  This  is  an  open,  avowed  public  declaration  that 
such  is  the  purpose  of  trade  associations  in  Great  Britain. 
What  a  striking  contrast  it  presents  to  the  permissible  activ- 
ities of  trade  associations  in  this  country !  And  now  to  show 
you  that  in  England  the  purposes  thus  stated  are  in  fact  per- 
formed, I  shall  read  to  you  briefly  from  a  notable  book,  treating 
of  trade  practices  in  Great  Britain.  It  is  written  by  a  learned 
professor,  Prof.  Macrosty  of  the  University  of  Birmingham', 
and  is  entitled  "The  Trust  Movement  in  British  Industry". 
The  book  shows  that  every  industry  in  Great  Britain  has  a 
trade  association.  The  author,  in  describing  their  functions 
and  purposes,  says:  "Price  Associations,  the  next  highest 
grade,  aim  at  the  regulation  of  sale  prices  as  well  as  of  the 
conditions  of  bargaining,  and  exhibit  a  great  variety  of  struc- 
ture  The  simplest  form  is  where  the  manufac- 
turers or  traders  meet,  either  as  individuals  or  as  members 
of  an  association  for  general  trade  purposes  and  determine  on 
a  rise  in  prices  to  meet  some  special  circumstance,  such  as  an 
increase  in  the  price  of  raw  materials.  The  agreed  rise  may 
either  be  for  an  indefinite  period  so  long  as  the  conditions  re- 
main the  same,  or  for  a  fixed  period,  after  which  competition 
is  once  more  free.  Thus  we  find  the  Associations  of  Coal 
Masters  raising  the  price  of  coal  at  the  beginning  of  Winter 
and  Associations  of  Grocers  trying  to  make  the  retail  price 
of  sugar  follow  advances  in  the  wholesale  price.  The  next 
stage  is  where  the  members  combine  for  a  definite  period, 
usually  a  year,  for  the  specific  purpose  of  fixing  prices  from 
time  to  time." 


It  goes  without  saying  that  procedure  of  this  nature  on 
the  part  of  trade  associations  in  this  country  would  be  grossly 
violative  of  the  Sherman  Law.  In  order,  however,  to  show  you 
that  this  procedure  in  England  is  done  openly  and  not  under 
cover,  and  is  done  without  legal  interference,  I  call  your  atten- 
tion to  these  succeeding  statements  made  by  Prof.  Macrosty, 
in  which  he  specifically  names  two  associations.  In  succeeding 
sentences  of  his  book  other  associations  are  also  named,  but 
time  will  not  permit  me  to  read  them  now. 

His  further  statement  to  which  I  refer,  is  this :  "Regulation 
may  take  place  irregularly  as  trade  demands,  as  is  done  by 
the  Fife  Coal  Association,  or  normally  at  meetings  weekly, 
monthly,  or  even  quarterly,  as  in  the  case  of  the  Midland  Un- 
marked   Bar    Association Generally    speaking, 

the  rules  of  a  Price  Association  provide  the  ordinary  machinery 
of  a  Committee,  President,  Secretary  and  Treasurer,  annual 
and  other  meetings.  Sometimes  a  deposit  of  money,  or  secur- 
ities, or  a  promissory  note  is  required,  out  of  which  penalties 
for  breach  of  the  rules  are  levied."     (Laughter). 

When  you  consider  the  contrast  which  the  foregoing  state- 
ment of  conditions  prevailing  in  England  present,  as  compared 
with  the  conditions  affecting  trade  associations  in  this  coun- 
try, you  may  well  laugh.  Of  course,  in  speaking  thus,  I  do 
not  mean  to  be  flippant,  for  the  subject  involves  too  many  seri- 
ous aspects  to  be  treated  jestingly.  I  venture  to  suggest,  as 
I  shall  later  more  fully  point  out,  that  if  Secretary  Hoover, 
in  his  laudable  efforts  to  increase  the  efficiency  of  trade  asso- 
ciations in  this  country,  would  investigate  the  conditions  thus 
shown  as  prevailing  in  England,  and  determine  whether  the 
more  liberal  policy  prevailing  in  England  may  not,  at  least 
to  some  extent,  be  utilized  in  this  country,  he  would  greatly 
advance  the  useful  efforts  which  he  has  been  making  in  behalf 
of  trade  association  activities. 

It  may  be  said  by  the  advocate  of  the  strict  enforcement 
of  the  Sherman  Law,  that  the  practices  thus  disclosed  as  pre- 
vailing in  England  are  done  without  sanction  of  law.  I  have, 
however,  shown  that  they  are  done  publicly  and  openly,  and 
I  will  now  show  that  they  have  the  highest  judicial  sanction 
and  support.  I  refer  to  the  important  decision  rendered  in 
1912  by  the  Privy  Council  of  England,  one  of  the  highest 


courts  in  that  country,  in  a  case  which  has  become  widely 
known  as  the  Australian  Collieries  case. 

That  important  case  arose  in  the  following  manner.  The 
great  and  progressive  commonwealth  of  Australia  has  a  statute 
largely  resembling  our  Sherman  Law ;  but,  as  you  will  see,  very 
differently  enforced.  Some  years  ago  the  entire  coal  industry 
of  Australia  got  together  in  one  combination;  the  members 
of  the  combination  were  the  coal  operators,  the  coal-carrying 
steamships  and  railways,  the  wholesalers  and  the  retailers. 
Now  that  is  A  to  Z,  from  the  ground  to  the  consumer.  They 
got  together  and  agreed  on  how  much  each  operator  should 
produce,  at  what  price  he  should  sell,  what  freight  rates  the 
railroads  and  steamships  should  charge,  and  at  what  price  the 
retailer  should  buy  and  should  sell.  And  a  suit  was  brought 
by  the  Attorney- General  of  the  Commonwealth  of  Australia, 
who  asserted  that  this  was  a  violation  of  the  law;  but  the 
Privy  Council  declared  it  lawful  and  stated: 

"It  can,  in  their  Lordships'  opinion,  never  be  of 
real  benefit  to  the  consumers  of  coal  that  colliery 
proprietors  should  carry  on  their  business  at  a  loss, 
or  that  any  profit  they  make  should  depend  on  the 
miner's  wages  being  reduced  to  a  minimum.  Where 
these  conditions  prevail,  the  less  remunerative  col- 
lieries will  be  closed  down,  there  will  be  great  loss 
of  capital,  miners  will  be  thrown  out  of  employment, 
less  coal  will  be  produced  and  prices  will  consequently 
rise  until  it  becomes  possible  to  re-open  the  closed  col- 
lieries or  open  other  seams.  The  consumers  of  coal 
will  lose  in  the  long  run  if  the  colliery  proprietors  do 
not  make  fair  profits  or  the  miners  do  not  receive  fair 
wages." 

Now,  I  say,  that  is  an  astonishing  statement  when  con- 
trasted with  Court  decisions  in  like  cases  in  this  country,  and 
with  the  speeches  you  hear  in  Congress.  For  there  they  say 
that  the  only  one  to  be  considered  is  the  ultimate  consumer, 
that  anything  that  prevents  prices  being  reduced  is  detrimental 
to  the  public,  that  therefore  competition  must  be  carried  on  to 
the  (Uttermost  extreme  and  that  competitors  cannot  get  to- 
gether in  great  emergencies  and  say,  "We  agree  that  the  price 
should  be  raised  thus  and  so",  in  order  that  weaker  members 
of  an  industry  shall  not  be  ruined.    The  prevailing  American 

8 


argument  is  that  competition  is  the  life  of  trade.  The  dis- 
tinguished Judge  who  wrote  the  sentence  which  I  have  read  to 
you,  apparently  believed  that  if  competition  is  the  life  of  trade, 
it  is  usually  the  death  of  the  competitors. 

It  is  not  open  to  the  slightest  question  that  if  a  situation 
similar  to  that  which  was  disclosed  in  the  Australian  Collieries 
case  had  been  presented  to  the  courts  of  this  country  under  the 
Sherman  Law,  our  courts  would  have  declared  the  combination 
thus  disclosed  to  be  unlawful.  Indeed,  there  is  not  the  slightest 
doubt  that  persons  comprising  such  combination  would,  under 
the  Sherman  Law,  have  been  subject  to  indictment  and  criminal 
prosecution. 

It  will  be  observed  that  the  controlling  thought  in  the 
minds  of  the  Privy  Council,  which  led  it  to  declare  the 
Australian  Collieries  agreement  to  be  lawful,  was  that  such 
agreement  enabled  the  parties  thereto  to  conduct  their  business 
without  loss,  and  that  consumers  of  coal  would  "lose  in  the 
long  run  if  the  colliery  proprietors  do  not  make  fair  profits". 
In  other  words,  the  principle  upon  which  the  decision  was 
based  is  that  competitors  should  be  permitted  to  combine  if 
such  a  course  is  necessary  in  order  to  prevent  the  closing  down 
of  the  less  remunerative  units  in  the  industry,  and  the  con- 
sequent loss  of  capital  and  reduction  of  the  number  of  men 
employed  in  the  industry. 

The  courts  of  this  country,  in  their  decisions  under  the 
Sherman  Law,  have  acted  in  direct  disregard  and  contradic- 
tion of  this  principle.  This  is  amply  shown  in  numerous  deci- 
sions of  our  Supreme  Court,  of  which  the  following  are  typical 
instances.  In  the  famous  Danbury  Hatters'  case,  the  Supreme 
Court  declared  certain  acts  to  be  unlawful,  although,  to  use 
the  Court's  words,  "the  impelling  motive  of  the  combination 
was  an  effort  to  better  the  conditions  of  the  combiners,  which, 
except  for  the  anti-trust  act,  might  be  proper  and  lawful".  In 
another  decision,  the  Supreme  Court  used  the  following  lan- 
guage : 

"It  is  argued  that  the  main  purpose  of  this  agree- 
ment being  to  increase  the  trade  of  the  parties,  to  en- 
hance competition  in  a  larger  field,  and  improve  the 
character  of  the  product,  these  objects  are  beneficial 
to  the  public  as  well  as  to  the  private  parties,  lawful 

9 


in  their  scope  and  purpose,  and  justifying  the  indirect 
and  partial  restraint  of  trade  involved  in  the  execution 
of  the  agreement  ....  Wider  markets  and 
more  trade  may  be  the  inducements  to  such  agree- 
ments, but  they  are  purposes  which  the  Act  of  Con- 
gress does  not  permit  to  interfere  with  the  freedom  of 
interstate  traffic." 

In  another  case,  the  Supreme  Court,  speaking  of  the  pro- 
visions of  the  Sherman  Law,  said: 

"Nor  can  they  be  evaded  by  good  motives.  The 
law  has  its  own  measure  of  right  and  wrong,  of  what 
it  permits  or  forbids,  and  the  judgment  of  the  courts 
cannot  be  set  up  against  it  in  a  supposed  accommoda- 
tion, of  its  policy  with  the  good  intention  of  the  parties, 
and  it  may  be,  of  some  good  results." 

The  comprehensive  contradiction  involved  in  the  words 
just  quoted,  to  the  principle  upon  which  the  Privy  Council 
acted  in  the  Collieries  case,  is  strikingly  obvious.  Our  Supreme 
Court  viewed  the  case  then  before  it  from  Alpha  to  Omega, 
that  is,  from  its  motives  or  inception,  to  its  results  or  con- 
clusion ;  and  stated  that  even  though  its  inception  be  character- 
ized by  good  motives,  and  its  conclusion  be  characterized  by 
good  results,  the  provisions  of  the  Sherman  Law  may  never- 
theless declare  it  to  be  unlawful.  Can  sharper  contrast  be- 
tween the  liberal  policy  of  England  and  the  drastic  policy  of 
our  country  on  this  important  subject  be  conceived?  Can 
any  man,  properly  informed,  doubt  the  severity,  not  to  say 
the  harshness,  of  our  Sherman  Law  ? 

It  is  hard  to  realize  that  such  contradictory  conditions 
can  exist  in  Great  Britain  and  in  the  United  States.  The  prin- 
ciple which  I  have  shown  as  prevailing  in  England,  prevails 
in  all  other  countries  except  ours.  We  are  the  only  country 
on  earth  which  forbids  cooperation.  Why,  the  very  principle 
of  our  Government  is,  in  a  way,  symbolized  by  the  motto  "e 
pluribus  unum",  out  of  many,  one,  meaning  strength  from 
union,  or  by  the  other  motto,  '^united  we  stand,  divided  we 
fall."  Children's  copy  books  are  full  of  these  maxims.  But 
our  laws  say  you  cannot  cooperate.  You  cannot  cooperate  on 
anything  that  is  really  vital  to  your  business  progress,  such  as 

10 


prices,  territory,  production  and  the  like.  Why,  during  the 
depth  of  the  business  crisis  last  year,  in  my  practice,  which 
often  consists  of  advising  trade  associations  and  groups  of 
manufacturers,  a  number  of  them  came  to  me  in  an  unnamed 
industry — I  mean  one  I  must  leave  unnamed^ — and  said,  "We 
are  in  a  terrible  condition;  we  were  prosperous  in  the  flush 
period  which  has  just  passed,  but  now  we  are  nearly  'broke'  and 
if  we  continue  to  operate  our  factories  we  will  be  'broke' ;  there 
are  about  fifty  belonging  to  our  group  and  we  find  it  a  most 
urgent  business  necessity  to  shut  down  our  factories".  And 
they  said  to  me,  "Can  we  under  the  Sherman  Law  through  our 
trade  association  pass  a  resolution  that  our  factories  shall  be 
closed  up?"  And, I  said,  "If  you  do,  you  will  violate  the  law. 
It  involves  a  curtailment  of  j^our  unrestricted  competition  and 
it  is  unlawful."  And  they  said,  "We  are  not  going  'broke'  by 
virtue  of  any  such  notion  as  that;  and  we  will  shut  our  fac- 
tories. We  absolve  you  from  any  blame.  We  will  shut  our 
factories."  They  shut  the  factories  and  thereby  husbanded  and 
retrenched  their  resources  and  when  times  improved  tliey 
opened  them  again  and  were  ready  to  go  on  and  continue  busi- 
ness, but  they  violated  the  law  in  doing  it  as  surely  as  if  they 
had  violated  the  law  against  grand  larceny,  burglary  or  any 
other  like  offense. 

This  is  a  very  extraordinary  situation.  It  is  very  extra- 
ordinary that  manufacturers  and  merchants  should  be  for- 
bidden from  cooperating  with  one  another  in  matters  like  those 
which  I  have  mentioned,  where  such  cooperation  would  be 
clearly  beneficial  to  them  and  to  their  industry.  But  the  laws 
of  this  country  forbid  such  cooperation.  In  my  opinion  that 
is  a  very  extraordinary  situation.  The  reason  for  it  is  that 
the  public  in  this  country  has  regarded  with  suspicion  all 
acts  of  cooperation  among  competitors,  ever  since  the  flagrant 
violations  practised  by  the  great  and  notorious  trusts  in  the 
earlier  days — violations  which  the  Sherman  Law  was  enacted 
to  prevent  and  for  the  continued  prevention  of  which  that  law 
should  be  maintained.  Still  aft'ected  and  influenced  by  the 
righteous  wrath  of  a  time  that  has  gone,  Congress  has  set  its 
face  implacably  against  any  amelioration  of  that  law,  which, 
in  this  country  alone,  of  all  countries  on  earth,  compels  its  able 
and  farsighted  leaders  of  industry  to  refrain  from  utilizing  one 
of  the  most  important  and  fundamental  factors  in  the  promo- 

11 


tion  of  efficieucy,  namely,  cooperation,  and  forces  them  to  cut 
one  another's  throats  in  relentless  competition. 

But,  I  beg  that  in  what  I  have  said  and  shall  say  today, 
I  will  not  be  misunderstood  as  seeking  to  justify  the  many 
instances  of  wrongful  restraints  of  trade  which  still  exist  in 
this  country,  or  as  advocating  the  repeal,  or  even  the  relaxa- 
tion in  severity,  of  the  statutes  which  are  intended  to  prevent 
and  to  punish  monopolistic  practices  and  injurious  agreements 
calculated  to  hinder  free  competition  with  resultant  detriment 
to  the  public  and  to  the  commonwealth.  I  hope  you  will  pardon 
the  personal  element  when  I  say  that  I  regard  with  pride  the 
fact  that  for  a  period  of  some  years  under  President  Roosevelt's 
admjinistration,  I  was  of  Government  Counsel  in  the  prosecu- 
tion of  one  of  the  great  trusts,  so  that  it  is  but  natural  that  I 
should  regard  with  approval,  as,  indeed  I  do,  the  power  given 
to  the  Government  by  the  Sherman  Law  to  disrupt  the  great 
monopolistic  aggregations  of  capital  which,  until  a  decade  ago. 
infested  the  highways  of  commerce  in  this  country.  It  is  often 
said  in  Congress  and  elsewhere  that  the  Sherman  Law  has 
proven  ineffectual,  or,  as  it  was  called  on  the  floor  of  the  Senate 
a  few  days  ago,  a  "dead-letter".  The  basis  for  this  characteri- 
zation is  believed  by  expert  students  of  the  subject  to  be  the 
ineffective  decrees  of  dissolution  in  the  Standard  Oil  case  and 
the  Tobacco  Trust  case.  That  these  decrees  were  ineffective 
in  the  restoration  of  true  competitive  conditions,  and  particu- 
larly in  the  creation  of  a  new  situation  whereby  independent 
competition  on  the  part  of  relatively  small  traders  could  arise 
and  flourish,  cannot  be  doubted.  But  those  who  have  carefully 
studied  the  subject  agree  that  it  is  equally  indisputable  that  the 
unfortunate  outcome  of  the  Government's  prosecution  of  those 
two  notorious  trusts  under  the  Sherman  Law,  was  in  no  way 
attributable  to  any  defect  or  weakness  in  that  Statute,  but 
was  due  entirely  to  the  way  in  which  the  decrees  of  the  Supreme 
Court  directing  the  disintegration  of  those  great  monopolies, 
were  executed.  Authorities  agree  that  the  Sherman  Law,  as 
an  agency  and  an  instrument  for  the  disruption  and  repressing 
of  trusts  or  other  like  monopolistic  combinations,  is  the  embodi- 
ment of  the  highest  legislative  and  judicial  wisdom.  It  was  the 
creation  of  the  most  able  lawyers  who  have  been  members  of 
the  United  States  Senate  since  the  Civil  War. 

Even  the  most  hostile  critic  of  the  effectiveness  of  the 

12 


Sherman  Law  will  not  question  its  potency  and  infinite  value 
when  he  recalls  that  that  Law  was  the  basis  upon  which  the 
Government  rested  its  prosecution  of  the  Northern  Securities 
Company — a  prosecution  which  resulted  in  complete  success, 
namely,  a  decree  of  the  Supreme  Court  directing  the  dis- 
memberment of  the  Securities  Company  and  the  release  of 
the  two  great  railway  systems  which  had  been  held  in  its 
grasp.  History  will  record  many  achievements  of  that  great 
American,  Theodore  Roosevelt,  upon  which  his  imperishable 
fame  will  be  founded;  but  it  is  a  matter  of  regret  to  students 
of  economics  that  it  will  not  be  long  remembered  that  it  was 
Theodore  Roosevelt,  as  President  of  the  United  States,  who 
directed  the  prosecution  of  the  Northern  Securities  Co.  and 
pressed  it  to  a  successful  conclusion.  His  brave  and  far- 
sighted  action  in  so  doing  ought,  indeed,  to  be  inscribed  high 
up  on  the  roll  of  the  courageous  and  patriotic  deeds  performed 
by  him  to  the  lasting  benefit  of  his  countrymen,  for  it  is  gen- 
erally admitted  that  if  he  had  not  thus  successfully  invoked  the 
power  of  the  law  against  the  Northern  Securities  Co.,  all  of  the 
railway  systems  of  the  land  would  speedily  have  been  brought 
within  the  grasp  and  control  of  a  small  number  of  "holding" 
corporations  similar  to  the  Northern  Securities  Company,  these 
"holding"  companies,  in  turn,  controlled  by  a  small  group  of 
men,  with  a  resultant  condition  which  would  have  been  truly 
menacing  to  the  well-being  of  the, Republic. 

There  is  high  authority  for  the  statement  which  I  have 
just  made  to  the  effect  that  the  Sherman  Law,  in  bringing 
about  the  disruption  of  the  Northern  Securities  Co.,  proved 
its  inestimable  value  to  this  country.  In  an  address  recently 
delivered  by  Mr.  Justice  Clarke,  an  Associate  Justice  of  the 
Supreme  Court  of  the  United  States,  he  said,  referring  to  the 
Northern  Securities  case,  that  if  the  Supreme  Court  had 
decided  that  case  against  the  Government,  and  had  thereby 
decreed  the  legality  of  the  Northern  Securities  Co., 

"no  man  can  overstate  what  the  effect  would  have 
been  upon  our  country.  If  the  case  had  been  decided 
the  other  way  and  men  had  been  left  free,  through 
corporate  organization,  to  combine  the  other  great 
transportation  lines  of  the  country  and  other  great 
departments  of  business,  it  seems  very  clear  that  our 
free  institutions  would  long  ere  this  have  been  sub- 

13 


jected  to  a  test  of  strength  and  endurance  to  which 
every  patriot  must  hope  they  may  never  be  exposed. 
This  one  case  ....  illustrates  the  fact  that 
the  scope  of  the  jurisdiction  of  the  Supreme  Court 
has  become  so  fateful  that  the  effects  of  many  of  its 
decisions  upon  the  welfare  of  our  country  are  as 
great  as  would  be  the  results  of  decisive  battles  in 
a  great  war." 

I  submit  that  the  forceful  language  just  quoted,  emanating 
from  the  high  source  from  which  it  did  emanate,  is  proof  of 
the  highest  character  that  the  Sherman  Law  has  proven  of 
immeasurable  value  to  our  country,  and  that  it  ought  forever 
to  remain  upon  our  statute  books  as  a  warning  and  as  a  defer- 
ent to  great  monopolistic  aggregations  of  capital  which,  until 
their  power  was  broken  by  the  force  of  the  Sherman  Law, 
threatened,  as  has  been  so  aptly  expressed  by  Mr.  Justice 
Clarke,  the  very  existence  of  the  Republic. 

I  hold  no  brief  for  "big  business"  in  the  sense  that  I  would 
seek  to  mitigate  or  condone  the  wrongful  and  oppressive 
methods  which,  a  decade  or  more  ago,  were  frequently  used 
by  the  great  corporations  of  this  country.  We  all  remember 
the  public  indignation  that  was  aroused  by  the  methods  em- 
ployed years  ago  by  the  oil  trust,  the  whiskey  trust,  the  sugar 
trust,  the  tobacco  trust  and  other  like  monopolies.  We  also 
well  remember  the  irregular  practices  of  the  railway, companies 
with  respect  to  the  granting  of  secret  rebates.  I  challenge, 
however,  contradiction  by  any  student  of  the  subject  who  is  well 
versed  therein,  of  the  statement  that  these  practices  have  to 
a  substantially  complete  extent  been  abandoned.  Such  aban- 
donment, it  will  also,  I  think,  be  agreed,  was  the  result  of  the 
exertion,  primarily  under  the  leadership  of  President  Roosevelt, 
of  the  majesty  of  the  law  as  embodied  in  the  Sherman  Act, 
and  in  the  statutes  forbidding  rebating.  In  these  respects,  the 
Sherman  Law  has  fully  vindicated  its  wisdom.  It  follows 
that  the  criticisms  of  that  statute  so  often  heard  in  Congress 
and  on  the  political  hustings,  to  the  effect  that  it  is  a  "dead- 
letter"  or  that  it  has  been  "emasculated"  (both  of  these  expres- 
sions are  much  favored  by  critics  of  the  Sherman  Law),  have 
no  basis  in  fact. 

Many  other  instances,  quite  familiar  to  the  expert  student 

U 


of  the  subject,  could  be  cited  where  the  Supreme  Court,  acting 
under  the  Sherman  Law,  has  issued  decrees  of  drastic  and 
compelling  force  in  bringing  about  the  disruption  of  other 
great  combinations. 

No  mian,  versed  in  the  subject,  can,  therefore,  doubt  the 
high  wisdom  and  effectiveness  of  the  Sherman  Law  in  its  dis- 
ruptive force  and  power  against  the  great  trusts ;  and  no  right- 
minded  and  patriotic  man,  so  versed,  could  wish  that  the  force 
and  power  of  the  Sherman  Law,  in  that  respect,  should  be 
abated  one  "jot  or  tittle".  In  what  has  just  been  said,  I  am 
by  no  means  unmindful  of  the  decision  of  the  Supreme  Court 
which  declared  the  U.  S.  Steel  Corporation  (the  so-called  "Steel 
Trust")  to  be  lawful  under  the  Sherman  Law.  An  adequate 
exposition  of  the  distinction  thus  involved  would  require  more 
time  than  is  permissible  on  this  occasion.  The  steel  industry 
is  so  closely  related  to  your  own,  that  I  venture  to  believe  that 
such  an  exposition  would  be  interesting  to  you  and  I  indulge 
the  hope  that  at  some  later  Convention  of  your  Association,  I 
may  be  given  the  privilege  of  presenting  the  legal  aspects  of 
the  "Steel  Trust"  decision,  as  showing  that  the  Sherman  Law 
still  remains  as  the  most  drastic  and  efficient  statute  of  that 
character  upon  the  statute-books  of  any  country  on  earth. 

Nor,  in  what  I  have  said  and  shall  say  today,  am  I  unmind 
ful  of  the  shocking  disclosures  recently  made  and  still  being 
made  in, New  York  City  by  the  Lockwood  Committee  under  the 
guidance  of  that  brilliant  lawyer  and  cross-examiner,  Samuel 
Untermyer.  With  a  display  of  skill  and  of  incredible  industry 
amounting  to  genius,  he  has  uncovered  and  disclosed  a  con- 
geries of  unlawful  combinations  and  practices,  both  on  the  part 
of  capital  and  of  labor,  that  has  astonished  and  shocked  the 
country.  No  man  in  his  senses,  would  dream  of  condoning  such 
offenses,  nor  dare  to  suggest  any  amelioration  of  the  laws  which 
proscribe  such  grave  misdeeds. 

But  even  Mr.  Untermyer,  with  a  sense  of  discrimination 
which  justly  denotes,  and  does  credit  to,  his  high  abilities, 
admits,  I  believe,  that  there  are  many  forms  of  co-operative 
activity  among  competitors,  now  forbidden  by  law,  which  could 
with  advantage  to  all,  be  made  lawful,  provided  that  the  exer- 
cise of  such  co-operative  power  be  placed  under  suitable  govern- 
mental supervision  so  that  it  may  not  be  abused.    In  that,  if 

15 


I  may  say  so,  I  fully  concur.  In  short,  my  contention  is  only 
that  the  statutory  condemnation  against  co-operative  agree- 
ments should  be  based  upon  a  common-sense  foundation  of  just 
discrimination,  to  the  end  that  on  the  one  hand  oppressive  and 
injurious  combinations  or  agreements  in  restraint  of  trade 
should  as  now  be  deemed  unlawful,  while  on  the  other  hand, 
co-operative  agreements  among  competitors,  calculated  to  pro- 
mote, and  resulting  in  the  promotion  of,  the  general  welfare 
of  an  industry  and  of  the  general  public,  should,  under  adequate 
supervision,  be  deemed  lawful  and  permissible.  By  so  doing, 
this  country  would  but  take  its  place  by  the  side  of  Great 
Britain — good  company,  I  make  bold  to  say,  in  the  high  enter- 
prise of  commercial  and  industrial  progress. 

I  find  that  I  have  trespassed  upon  your  time  and  patience 
so  much  that  I  must,  with  all  dispatch,  proceed  to  some  par- 
ticular phases  of  the  subject  having  a  special  application  to 
your  industry,  and  other  like  industries. 

There  have  recently  been  two  further  developments  of  the 
law  of  this  subject  intimately  affecting  the  trade  and  commerce 
of  this  country.  One  is  the  recent  decision  of  the  Federal 
Trade  Comission  in  the  Mennen  Co.  case,  and  the  other  is  the 
decision  of  the  United  States  Supreme  Court  in  what  is  known 
as  the  Hardwood  Lumber  Co.  case.  I  read  in  the  report  of 
your  proceedings  at  your  recent  convention  held  last  month  at 
Birmingham,  Ala.,  that  a  letter  was  read  by  your  president 
from  some  business  concern  calling  attention  to  the  Mennen 
Co.  decision  and  asking  the  attitude  of  your  Association  con- 
cerning it;  and  that  it  was  referred  to  this  adjourned  meeting 
of  your  convention  now  being  held  at  Atlantic  City.  So,  with 
your  permission,  I  shall  say  something  about  the  Mennen  deci- 
sion. 

THE  MENNEN  CO.  DECISION 

By  way  of  appreciation  of  your  courteous  invitation  to 
address  you  here  today,  and  in  order  that  I  might  be  able  to 
discuss  that  decision  more  intelligently,  I  have  obtained  from 
the  Federal  Trade  Commission  at  Washington,  all  of  the  papers 
and  documents  necessary  to  an  understanding  of  the  decision 
in  that  case.  As  a  result  of  a  close  study  of  these  papers,  I 
feel  justified  in  asserting  that  it  is  a  most  surprising  decision. 

16 


In  substance  the  Menuen  case  is  this :  Complaint  was  made 
against  the  Mennen  Co.  to  the  effect  that  they  would  not  give 
the  same  discount  and  therefore  would  not  make  the  same 
prices  for  the  same  quantities,  to  non-wholesalers  as  they 
would  to  wholesalers.  Apparently,  in  that  industry  there  had 
been  developed  a  system  of  cooperative  buying,  by  which  re- 
tailers grouped  themselves  together  and  bought  through  a 
common  source  in  what  may  be  called  wholesale  quantities, 
and  the  Mennen  Co.  refused  to  give  to  the  retailers  thus  pur- 
chasing in  wholesale  quantities  the  same  price  as  it  gave  to 
wholesalers.  Apparently,  the  position  taken  by  the  Mennen  Co. 
was  that  the  wholesalers  were  a  necessary  part  of  the  plan 
of  distribution  of  that  company,  being  in  substance,  you  might 
say,  salesmen  of  the  company,  so  that  it  seemed  to  the  com- 
pany to  be  good  policy  and  calculated  to  advance  the  best 
interests  of  the  company  to  give  a  lower  price  to  wholesalers 
than  to  retailers  even  where  the  latter  purchased  the  same 
quantities  as  the  former.  The  subject  was  fully  considered  by 
the  Federal  Trade  Commission  which  reached  the  astonishing 
conclusion  that  this  procedure  on  the  part  of  the  Mennen  Co. 
is  unlawful. 

With  all  of  the  respect  and  deference  that  a  law-abiding 
citizen  must  have  for  a  governmental  tribunal,  I  venture  to 
assert  that  this  decision  is  wrong  and  cannot  prevail.    I  have 
here  the  brief  of  the  Government  counsel  showing  that  he  based 
his  demand  that  the  Commission  decide  against  the  Mennen 
Co.,  upon  the  contention  that  the  company's  procedure  vio- 
lated Section  2  of  the  Clayton  Law.    There  never  was  a  greater 
misconception  as  to  a  proposition  of  law,  as  I  respectfully 
believe.     Section  2  of  the  Clayton  Law  says  in  substance: 
"It  shall  be  unlawful  for  any  person  engaged  in 
commerce     ....     either  directly  or  indirectly 
to  discriminate  in  price  between  different  purchasers 
of  commodities     ....     where  the  effect  of  such 
discrimination  may  be  to  substantially  lessen  compe- 
tition or  tend  to  create  a  monopoly  in  any  line  of 
commerce." 

Basing  his  contention  upon  the  mere  letter  of  this  section 
as  thus  quoted,  and,  as  I  respectfully  believe,  disregarding  its 

17 


history  and  its  true  intent  as  disclosed  by  such  history,  and 
overlooking  court  decisions  to  the  contrary,  the  Government 
counsel  claimed  in  his  brief,  and  the  Federal  Trade  Commis- 
sion sustained  the  claim,  that  the  Mennen  Co.  violated  that 
section.  In  my  opinion,  it  did  no  such  thing.  Any  one  who 
has  studied  the  history  of  the  Clayton  Law  knows  that  Section 
2  was  enacted  for  a  totally  different  purpose.  The  section  was 
written  in  order  to  prevent  the  recurrence  of  practices  fre- 
quently employed  by  the  great  trusts  in  former  years.  For 
example,  the  records  of  the  Federal  courts  will  show  that  some 
years  ago  there  was  a  minor  cigarette  company  in  the  South 
which  had  begun  to  make  a  cigarette  which  proved  attractive 
and  a  good  seller,  so  that  this  minor  company  was  beginning 
to  make  some  headway  in  the  cigarette  industry.  Thereupon 
the  Tobacco  Trust,  in  order  to  choke  off  and  destroy  the  com- 
petition of  this  minor  company,  started  to  sell  a  certain  very 
popular  cigarette  in  the  same  territory  in  which  the  minor 
company  was  selling  its  product,  and,  in  order  to  prevent  the 
latter  company  from  having  a  market  for  its  product,  the 
Tobacco  Trust  not  only  cut  the  selling  price  of  its  popular 
cigarette  in  that  territory  but  actually  gave  away  packets  of 
its  cigarettes  gratis  on  the  streets  of  towns  in  the  territory 
in  which  the  minor  company  was  selling  its  product.  During 
this  time  the  Trust  was  selling  its  popular  cigarette  throughout 
the  rest  of  the  country  at  its  regular  prices.  The  result  of  the 
discrimination  thus  practiced  by  it  against  the  minor  company 
was  only  what  might  have  been  expected.  Confronted  with 
the  vast  power  of  the  Trust  and  unable  to  meet  the  ruinous 
competition  mentioned,  the  minor  company  failed  in  business 
and  went  into  bankruptcy.  The  court  records  will  show  similar 
discriminatory  methods  which,  in  days  now  long  past,  the 
Standard  Oil  Trust  employed  to  drive  out  of  existence  smaller 
competitors  in  particular  territories.  The  purpose  and  the 
effect  of  such  procedure  is  manifest.  The  two  trusts  just 
mentioned,  and,  perhaps,  other  trusts,  resorted  to  a  species  of 
discrimination  in  prices  for  the  avowed  purpose  of  driving  out 
of  existence  particular  competitors  in  particular  districts  or 
territories.  It  is  this  character  of  discrimination  against 
which  Section  2  of  the  Clayton  Law  is  aimed.  In  substance, 
that  section  says  to  manufacturers  occupying  a  dominating 
position  in  an  industry: 

18 


"You  cannot  go  into  a  particular  district  where 
some  competitor  is  selling  his  product  in  competition 
with  your  product,  and  by  discriminating  in  the  sales 
price  of  your  product  in  that  territory  as  compared 
with  your  regular  selling  price  elsewhere,  drive  that 
competitor  out  of  existence.  For,  experience  has  shown 
that,  with  the  power  you  possess,  you  can  keep  up 
this  price-cutting  procedure  until  you  drive  your  com- 
petitor out  of  existence  and  then  you  will  restore  your 
prices  in  that  district  to  the  same  level  as  you  have 
maintained  throughout  the  rest  of  the  country,  the 
final  result  being  that  the  community  in  question  has 
been  deprived  of  the  existence  of  a  business  establish- 
ment whose  continued  existence  would  be  helpful  to 
the  community,  and  you  have  caused  loss  to  the  owners 
of  the  competing  industry  which  you  have  thus 
destroyed  and  have  driven  into  bankruptcy.  This 
procedure  shall  not  be  permitted,  and,  accordingly, 
this  section  forbids  you  ^to  discriminate  in  price  be- 
tween different  purchasers  of  commodities',  that  is, 
between  the  purchasers  of  your  commjodities  in  the 
particular  district  referred  to  as  compared  with  the 
purchasers  of  your  commodities  in  the  rest  of  the  coun- 
try, for  the  result  of  such  discrimination  will  be  'to 
substantially  lesKsen  competition  or  tend  to  create  a 
monopoly'  in  your  line  of  business." 

The  point  which  I  am  now  endeavoring  to  present  is  of 
the  essence  of  the  matter  under  consideration,  and  I  therefore 
desire  to  emphasize  that,  in  my  opinion,  the  true  intent  and 
meaning  of  Section  2  of  the  Claj^ton  Law  was  to  prevent  con- 
cerns of  the  nature  of  the  great  trusts  which  occupj^  a  dominat- 
ing position  in  their  respective  industries  from  destroying 
competitors  by  discriminating  in  prices  the  territory  in 
which  such  competitors  operate,  while  maintaining  their  regu- 
lar prices  elsewhere. 

But  the  situation  occupied  by  the  Mennen  Co.  is  quite  dif- 
ferent. It  is  not  claimed  by  the  Government,  nor  can  it  be 
claimed,  that  the  procedure  adopted  by  that  Company  has 
hurt  or  can  hurt  any  competitor  of  that  Company.  The  Mennen 
Co.,  by  the  procedure  referred  to,  does  not  aim,  nor  could  it,  if 
it  wished  to,  aim  to  drive  out  of  business  some  competitor  or 

19 


some  particular  brand  manufactured  by  a  competitor.  The 
effect  and  purpose  of  the  Mennen  system  is  to  encourage  and 
keep  alive  wholesalers  as  a  necessary  element  in  the  company's 
scheme  of  distribution.  This  could  not  be  done  if  retailers, 
grouping  themselves  together  and  thereby  being  able  to  pur- 
chase in  wholesale  quantities,  should  be  able  to  obtain  from 
the  Mennen  Co.  the  same  price  as  the  wholesaler  obtains.  Obvi- 
ously in  such  a  case  the  wholesaler  would  lose  the  business 
which  he  would  otherwise  obtain  from  the  retailer,  for  if  the 
latter  were  unable  to  obtain  the  wholesaler's  price  from  Mennen 
Co.,  he  would  make  his  purchases  from  the  wholesaler.  If  the 
requirement  of  the  decision  made  by  the  Federal  Trade  Com- 
mission should  be  carried  to  its  logical  conclusion,  it  would 
mean  the  destruction  of  the  wholesaler.  Clearly  this  would 
be  to  the  great  disadvantage  of  Mennen  Co.  and  of  other  like 
large  manufacturers.  For  with  the  multiplicity  of  articles 
dealt  in  by  such  manufacturers,  with  the  infinitely  varied 
quantities  which  retailers  from  time  to  time  require,  with  the 
vast  number  of  accounts  which  the  manufacturer  would  have 
to  carry,  clearly  the  cost  of  doing  business  on  the  part  of  the 
manufacturer  would  be  enormously  increased  if  he  were  de- 
prived of  the  wholesale  scheme  of  distribution  and  were  com- 
pelled to  make  his  sales  directly  to  the  retailer.  I  digress  to 
say  that  every  merchant  knows  that  there  are  some  lines  of 
industry  where  the  number  of  articles  dealt  in  are  not  numerous 
and  the  quantities  required  by  retailers  are  not  necessarily 
small  and  the  number  of  accounts  dealt  in  not  necessarily  large, 
where  direct  dealing  by  the  manufacturer  with  the  retailer  is 
economically  possible.  But  in  a  business  like  Mennen's,  and, 
for  example,  in  the  dry  goods  business,  the  jewelry  business, 
the  hardware  business,  and  the  like,  it  is  not  economically 
feasible  for  the  manufacturer  to  deal  directly  with  the  retailer. 
I  repeat  that  it  is  presumably  upon  this  sound  economic  basis 
that  Mennen  has  established  his  policy  of  preferential  treat- 
ment of  wholesalers.  The  Federal  Trade  Commission  has,  how- 
ever, in  this  important  decision,  declared  this  to  be  unlawful 
and  in  violation  of  the  Clayton  Law. 

I  have  stated  that,  in  my  opinion,  the  decision  is  contrary 
to  the  purpose  for  which  Section  2  of  the  Clayton  Law  was 
enacted.  I  now  venture  to  go  a  step  further  and  to  say  that 
this  decision  is  directly  in  conflict  with  two  of  the  most  recent 

20 


decisions  of  the  United  States  Supreme  Court  under  the 
Sherman  Law,  namely,  its  decision  in  the  Colgate  &  Co.  case 
and  in  the  Beech-Nut  Packing  Co.  case.  In  those  cases  Colgate 
&  Co.  and  the  Beech-Nut  Co.,  respectively,  undertook  to  require 
their  customers  to  observe  certain  resale  prices  by  refusing  to 
sell  such  customers  as  failed  to  observe  such  prices.  In  both 
of  those  cases,  the  Supreme  Court  decided  that  this  was  law- 
ful. I  may  add  that  the  Federal  Trade  Commission,  in  the 
Beech-Nut  Co.  case,  had  declared  it  unlawful  and  was  reversed 
by  the  Supreme  Court  in  that  respect. 

The  language  used  by  the  Supreme  Court  on  this  point 
in  the  Beech-Nut  case  is : 

"It  is  settled  that,  in  prosecutions  under  the 
Sherman  Act,  a  trader  is  not  guilty  of  violating  its 
terms  who  simply  refuses  to  sell  to  others,  and  he  may 
withhold  his  goods  from  those  who  will  not  sell  them 
at  the  prices  which  he  fixes  for   their  resale." 

Now  you  will  observe  that,  although  the  Supreme  Court 
said,  in  substance,  "You  are  not  compelled  to  sell  your  cus- 
tomer at  all  if  you  do  not  wish  to  do  so",  the  Federal  Trade 
Commission  now  says  to  the  Mennen  Co.  "You  must  for  like 
quantities  sell  to  the  retailer  at  the  same  price  as  you  sell  to 
the  wholesaler."  This  is  equivalent  to  saying  to  the  Mennen 
Co.  "that  you  are  obliged  to  sell  to  the  retailer  and  also  that 
you  are  obliged  to  sell  to  him,  for  the  same  quantities,  at  the 
same  price  as  you  sell  to  the  wholesaler."  I  respectfully  sub- 
mit that,  as  a  matter  of  law,  this  dictum  involves  a  contradic- 
tion of  the  decisions  of  the  Supreme  Court  in  the  Colgate  and 
in  the  Beech-Nut  cases. 

Now,  permit  me  to  read  to  you  from  the  brief  of  the 
Government  counsel  in  the  Mennen  case,  where  he  sums  up  the 
accusations  made  against  the  Mennen  Co.  and  points  out  what 
he  claims  to  be  the  objects  that  Mennen  had  in  mind  in  estab- 
lishing the  policy  under  consideration.  He  says  the  purposes 
of  Mennen  were  threefold ;  namely,  that,  in  making  a  discrimi- 
nation in  price  as  between  wholesaler  and  non-wholesaler  his 
purpose  was,  first,  to  force  the  resale  of  its  products  at  its 
suggested  prices.  I  submit  that  the  Supreme  Court,  in  the 
Colgate  and  Beech-Nut  cases,  has  decided  that  Mennen  had  a 
perfect  right  to  do  this. 

21 


Second,  that  the  object  of  Mennen  was  "to  penalize  eflfi 
ciencj  and  economy."  I  say,  quite  respectfully,  that  it  seems 
incredible  that  such  a  proposition  should  be  seriously  asserted. 
But  it  was  asserted,  in  the  words  as  above  quoted,  by  the 
Grovernment  counsel.  I  venture  to  say  that  it  is  a  surprising 
thing  to  assert  of  Mennen,  or  of  any  business  concern,  that 
its  object  under  any  circumstances  is  "to  penalize  efficiency  and 
economy."  Of  course,  what  was  meant  was  that  Mennen,  in 
endeavoring  to  keep  alive  the  wholesale  scheme  of  distribution, 
was  tending  to  minimize  the  field  of  operations  sought  to  be 
occupied  by  what  are  known  as  "cooperative  purchasing 
agencies".  I  shall  not  stop  to  explain  the  meaning  of  this  term, 
as  it  is  well  understood  by  you  and  by  merchants  generally. 
But  surely  Mennen  did  not  have  in  mind  any  onslaught  upon 
such  purchasing  agencies,  or  any  purpose  to  penalize  them,  or 
to  lessen  their  efficiency.  His  aim  clearly  was  to  keep  alive  the 
wholesaler  as  a  necessary  element  in  his  scheme  of  distribu- 
tion ;  and  if  in  doing  so  the  "cooperative  purchasing  agencies" 
should  lose  business  or  otherwise  suffer,  clearly  this  was  not 
because  Mennen  was  endeavoring  to  "penalize  efficiency  and 
economy". 

Can  you  imagine  the  executive  head  of  the  Mennen  Co., 
or  any  sane  executive  head  of  any  business  concern,  having  in 
his  mind  or  in  his  heart  any  such  foolish — nay,  detestable — 
purpose  as  the  "penalizing  of  efficiency  and  economy"?  And 
yet  the  Government  counsel  has  seriously  urged  this  as  one 
of  the  motives  actuating  the  Mennen  Co.  in  the  matter  now 
under  consideration. 

The  third  purpose  stated  by  the  Government  counsel  is 
to  "satisfy  complaints  and  demands  of  individual  members  of 
the  National  Wholesale  Drug  Association — competitors  of 
cooperative  wholesale  houses". 

Now,  what  is  there  wrong  about  that,  either  legally  or 
morally?  Under  what  kind  of  a  government  are  we  living  if 
Mennen  has  not  the  right  to  endeavor  to  please  its  customers, 
if  it  does  so  by  methods  which  are  economically,  moralh%  and 
legally  correct?  Clearly  the  procedure  is  unobjectionable  from 
an  economic  and  a  moral  standpoint.  And  with  all  confidence 
I  venture  the  assertion  that  no  legal  decision  can  be  cited  to 
show  that  such  a  procedure  is  objectionable  from  a  legal  stand- 

22 


point,  bearing  in  mind  that  the  objection  as  above  quoted 
which  was  made  by  the  Government  counsel  is  that  Mennen 
sought  to  satisfy  the  complaints  and  demands  of  individual 
memhers  of  the  Drug  Association.  There  are  decisions  that, 
if  a  manfacturer  yields  to  the  united  demands  of  the  memlbers 
of  an  association  thereby  acting  under  the  coercion  of  numbers, 
it  may  be  unlawful.  But  there  is  no  decision  which  holds  that 
a  manufacturer  may  not  of  his  own  free  will  and  accord  meet 
the  individual  requests  or  demands  of  the  members  of  an  asso- 
ciation. I  respectfully  submit  that  none  of  these  three  grounds 
of  objection  urged  by  the  Government  counsel  and  sustained 
by  the  Federal  Trade  Commission,  is  sound  in  law.  And  yet 
they  are  the  accusations  made  against  the  Mennen  Co.  which 
have  resulted  in  the  Federal  Trade  Commission  denouncing  the 
policy  established  by  that  Company. 

I  respectfully,  and  with  all  deference,  venture  to  say  that 
the  order  tbus  made  by  the  Commission  will  not  stand,  if,  as 
provided  by  law,  it  is  reviewed  by  the  Circuit  Court.  I  cannot 
imagine  that  any  court  of  law  would  permit  such  an  order  to 
stand. 

THE  HARDWOOD   LUMBER  DECISION 

The  next  topic  which  I  shall  discuss  is  the  decision  of  the 
Supreme  Court  rendered  a  year  or  so  ago  in  the  Hardwood 
Lumber  case.  This  was  a  prosecution  instituted  by  the  Govern- 
ment under  the  Sherman  Law  against  a  number  of  associations 
and  companies  in  the  hardwood  lumber  business.  In  the 
aggregate  they  constituted  an  important  proportion  of  the 
hardwood  lumber  industry.  They  had  formed  an  "open  price 
competition  system",  and  the  evidence  showed  that  they  had 
pushed  to  the  full  limit,  the  possibilities  afforded  by  such  a 
sj^stem  for  the  fixing  of  prices  and  the  curtailment  of  produc- 
tion. 

Advocates  of  the  open  price  plan  contend  that  the  purpose 
of  such  plan  is  merely  to  acquaint  its  members  with  prices  in 
past  transactions.  They  argue  that  thereby  members  are  placed 
in  a  more  intelligent  position  to  conduct  their  business,  inas- 
much as  a  knowledge  of  the  trend  of  prices  in  past  transactions 
will  enable  them  the  better  to  forecast  the  future  tendency  of 
prices  and  in  that  way  the  members  will  be  able  to  govern  their 
selling  policies  more  judiciously.     Such   advocates   contend, 

23 


however,  that  the  open  price  plan  is  not  intended  to  be  the 
basis  or  the  medium,  and  is  in  fact  not  the  basis  or  the  medium, 
for  agreeing  upon  or  fixing  future  prices  or  for  doing  anything 
with  respect  to  curtailing  production  by  concerted  agreement. 

The  court  records  in  the  Hardwood  Lumber  case  show  that 
the  Supreme  Court  viewed  the  purposes  of  the  open  price  plan 
employed  in  that  case  as  having  the  definite  purpose  and 
result  of  fixing  future  prices  and  of  curtailing  production. 
In  other  words,  the  Supreme  Court  decided  that  the  open  price 
plan  was  employed  in  that  instance  not  for  the  limited  pur- 
poses urged  by  its  advocates,  namely,  the  obtaining  of  infor- 
mation as  to  past  transactions,  but  was  employed  to  the  full 
limit  of  its  possibilities  for  the  purpose  of  fixing  by  agreement 
future  prices,  and,  likewise,  for  the  purpose  of  agreeing  upon 
a  curtailment  of  production.  I  quote  the  following  from  the 
opinion  of  the  Supreme  Court  in  that  case : 

"But  not  only  does  the  record  thus  show  a  per- 
sistent purpose  to  encourage  members  to  unite  in 
pressing  for  higher  and  higher  prices,  without  regard 
to  cost,  but  there  are  many  admissions  by  members, 
not  only  that  this  was  the  purpose  of  the  'plan'  but 
that  it  was  fully  realized  ....  the  'plan'  is, 
essentially,  simply  an  expansion  of  the  gentleman's 
agreement  of  former  days,  skilfully  devised  to  evade 
the  law.  To  call  it  open  competition  because  the 
meetings  were  nominally  open  to  the  public  . 
cannot  conceal  the  fact  that  the  fundamental  pur- 
pose of  the  'plan'  was  to  procure  'harmonious'  indi- 
vidual action  among  a  large  number  of  naturally  com- 
peting dealers  with  respect  to  the  volume  of  produc- 
tion and  prices     .      .      .      ." 

Inasmuch  as  the  Sherman  Law  by  its  own  plain  language, 
reinforced  by  countless  decisions  of  the  Federal  Courts,  has 
indisputably  declared  to  be  unlawful,  concerted  action  among 
competitors  for  the  purpose  of  fixing  prices  and  regulating 
production,  nothing  is  more  natural  than  that  the  Supreme 
Court  should  declare,  as  it  did  declare,  the  plan  thus  pursued 
in  the  Hardwood  Lumber  case  to  be  unlawful.  As  the  Sherman 
Law  now  stands,  the  Supreme  Court  could  not  reasonably  do 
otherwise.     It  is  quite  another  thing  to  argue  that,  from  an 

24 


economic  standpoint,  agreements  with  respect  to  prices  and 
with  respect  to  production,  under  suitable  supervision  and  for 
the  purpose  of  meeting  industrial  emergencies,  are  commend- 
able and  should  be  deemed  lawful.  In  Great  Britain,  as  has 
been  pointed  out,  such  is  the  law  of  the  land.  But  it  is  not  the 
law  of  this  land,  and  the  Supreme  Court,  in  my  opinion, 
decided  the  lumber  case  correctly ;  and  I  venture  to  predict  that 
it  will  stand  hereafter  as  a  correct  interpretation  of  the  Sher- 
man Law  until  and  unless  that  law  shall  in  that  respect  be 
amended. 

THE  EDGE  RESOLUTION 

What  I  have  just  said  brings  me  logically  to  a  considera- 
tion of  the  third  topic  which  I  desire  to  present  to  you  today, 
namely,  the  brave  and  commendable  but  diflScult  enterprise 
undertaken  by  Senator  Edge,  of  New  Jersey,  as  embodied  in 
what  has  now  become  widely  known  as  the  "Edge  Resolution". 
The  resolution  is  thus  entitled : 

"Joint  Resolution  creating  a  committee  to  in- 
vestigate existing  conditions  of  industry  and  com- 
merce in  the  United  States  for  the  purpose  of  recom- 
mending to  Congress  legislation  defining  the  rights 
and  limitations  of  cooperative  organizations  as  dis- 
tinguished from  illicit  combinations  in  restraint  of 
trade." 

The  resolution  was  elaborately  debated  on  the  floor  of 
the  Senate,  on  April  17,  1922,  but  no  action  was  taken  thereon. 
These  debates  contain  the  statement  made  by  Senator  Edge 
that  he  is  not  a  lawyer.  Although  the  subject  involves  ques- 
tions of  a  strictly  legal  nature.  Senator  Edge,  with  commend- 
able courage  and  animated  by  the  laudable  purpose  of  liberat- 
ing trade  associations  and  the  industries  of  the  country  gen- 
erally, from  the  handicaps  imposed  by  the  Sherman  Law, 
undertook  to  present  and  to  argue  his  resolution  although  he 
knew  he  would  be  confronted,  as  he  was  in  fact  confronted, 
by  astute  lawyers  in  the  Senate  who  look  upon  any  amendment 
of  the  Sherman  Law  with  horror. 

The  substance  of  Senator  Edge's  argument  is  that  the 
decision  in  the  Hardwood  Lumber  case  has  caused  such  ob- 

25 


scurity  on  the  part  of  trade  associations  with  respect  to  the 
meaning  of  the  Sherman  Law  and  of  its  application  to  trade 
association  activities,  as  greatly  to  hamper  their  efficiency. 

I  regard  the  effort  which  Senator  Edge  is  making  as  most 
commendable,  and,  while  I  believe  that  he  has  set  in  motion 
a  suggestion  which  will  eventually  accomplish  much  good,  I 
am,  nevertheless,  strongly  of  the  opinion  that  he  is  in  error 
when  he  states  to  be  the  basis  of  his  resolution,  the  correction 
of  obscurity  growing  out  of  the  Hardwood  Lumber  decision, 
and  when  he  further  states,  as  he  did  state  in  the  Senate 
debates,  that  he  did  not  aim  at  any  amendment  of  the  Sherman 
Law  for  the  purpose  of  carrying  out  his  object  of  liberating 
trade  associations  from  the  handicap  under  which  they  are 
now  resting.  I  say  that,  in  my  opinion,  he  was  in  error  in  say- 
ing that  there  is  any  obscurity  in  the  Hardwood  Lumber  deci- 
sion, because  there  is,  in  fact,  no  obscurity.  It  is  the  same  thing 
that  we  have  heard  throughout  the  country  for  years  past, 
namely,  that  business  men  do  not  know  what  they  may  lawfully 
do  or  may  not  lawfully  do  under  the  Sherman  Law.  That 
assertion  is  not  correct  for,  in  the  broadest  sense,  they  do,  or 
can,  know  what  they  may  do  and  what  they  may  not  do,  if 
they  take  the  least  effort  to  find  out.  Leaving  aside  mere 
mjatters  of  administration  or  of  executive  management,  they 
cannot  do  anything  lawfully  under  the  Sherman  Law  which  is 
in  the  nature  of  genuine  and  practical  cooperation,  such  as  is 
freely  permitted  in  Great  Britain  and  in  all  other  countries 
except  this.  The  Hardwood  Lumber  decision  does  not  in  the 
least  involve  any  obscurity  in  this  respect.  It  definitely  and 
clearly  declares  that  trade  associations  may  not  lawfully  fix 
prices  or  agree  upon  production.  The  obscurity  to  which 
Senator  Edge  alludes  is  not  with  respect  to  what  that  decision 
means;  but  with  respect  to  the  wisdom  of  the  law  upon  which 
the  decision  is  based.  In  other  words,  the  question  should  not 
be,  "What  does  the  Hardwood  decision  mean"  for  its  meaning 
is  plain  enough,  but  the  question  should  be,  "Why  is  it  the 
law  as  shown  in  the  Hardwood  decision,  that  trade  associa- 
tions are  prevented  from  acting  in  cooperation  with  respect 
to  those  subjects  which,  above  all  others,  require  cooperation, 
namely,  the  fixing  of  prices  when  an  emergency  requires  it, 
and  the  curtailment  of  production  when  an  emergency  requires 
such  curtailment?"     Of  course  this  question  should  not  com- 

26 


prise  the  consideration  of  such  a  right  when  an  emergency  does 
not  exist,  nor  when  the  purpose  is  to  fix  prices  extortionately, 
nor  when  the  production  is  curtailed  so  as  to  do  damage  to  the 
community.  In  such  instances  the  law  should  remain  as  it  is. 
But  where  the  continued  existence  of  an  industry  in  the  face 
of  some  emergency  requires  concerted  and  cooperative  action 
with  respect  to  the  fixing  of  prices  and  the  curtailment  of  pro- 
duction, it  seems  most  logical  and  natural  that  such  coopera- 
tion should  be  permitted.  This  is  true  in  England  and  in  all 
other  civilized  countries  except  ours.  I  have  read  to  you  to- 
day, but  it  is  worth  reading  again,  the  illuminating  statement 
made  by  one  of  the  distinguished  judges  of  the  Privy  Council 
of  England  in  the  Australian  Collieries  case  as  follows: 

"It  can,  in  their  Lordship's  opinion,  never  be  of 
real  benefit  to  the  consumers  of  coal  that  colliery  pro- 
prietors should  carry  on  their  business  at  a  loss,  or 
that  any  profit  they  make  should  depend  on  the  miners' 
wages  being  reduced  to  a  minimum  .... 
The  consumers  of  coal  will  lose  in  the  long  run  if  the 
colliery  proprietors  do  not  make  fair  profits  or  the 
miners  do  not  receive  fair  wages." 

Now  I  submit  that  when  Senator  Edge  was  confronted 
by  objections  made  by  other  senators  to  the  effect  that  any 
amendment  of  the  Sherman  Law  was  not  to  be  dreamed  of,  his 
correct  reply  should  have  been : 

"My  resolution  is  not  aimed  at  clearing  up  any 
obscurity  in  the  Hardwood  decision,  for  there  is  no 
such  obscurity.  It  is  intended  to  liberate  the  trade 
associations  of  this  country  and  likewise  the  legitimate 
trade  and  commerce  of  this  countr^%  as  distinguished 
from  illicit  combinations  in  restraint  of  trade  and  as 
distinguished  from  trusts  and  monopolies,  from  the 
antiquated  and  illogical  handicap  placed  upon  them 
by  the  Sherman  Law  in  forbidding  resort  to  coopera- 
tive agreements  where  the  result  of  such  agreemlents 
will  be  beneficial  to  the  industries  involved  and  not  in- 
jurious to  the  community  at  large.  The  Commission 
which  the  Edge  Resolution  seeks  to  create  should  be 
given  the  power  to  investigate  this  important  subject 
in  order  to  ascertain  why  it  is  that,  in  this  country 

27 


alone,  trade  associations  and  merchants  generally  are 
forbidden  to  act  in  concert  with  respect  to  questions 
like  prices  and  production,  even  if  such  concerted 
action  be  necessary  for  the  continued  existence  of  an 
industry  and  cannot  be  harmful  to  the  community. 
In  other  words,  the  Edge  Resolution  boldly  asserts 
that  the  Sherman  Law,  in  its  just  effort  to  repress 
trusts  and  other  monopolistic  combinations,  has  gone 
too  far  and  commits  a  grave  injury^  to  the  commercial 
welfare  of  this  country  by  extending  its  prohibitions 
to  concerted  action  upon  the  part  of  legitimate  busi- 
ness units  possessing  no  power  or  purpose  of  creating 
a  monopoly.  The  Edge  Resolution  therefore  aims  at 
an  amendment  to  the  Sherman  Law  which  will  provide 
that,  under  suitable  governmental  control  and  super- 
vision, trade  associations  and  competitors  generally 
may  agree  with  one  another  as  to  prices,  as  to  produc- 
tion, and  as  to  other  like  fundamental  matters,  all  of 
which  are  now  forbidden  by  the  Sherman  Law. 

^'In  conclusion,  the  Edge  Resolution  asserts  that 
the  obscurity  which  now  exists  is  not  an  obscurity 
as  to  the  meaning  of  the  law,  but  an  obscurity  as  to 
why  it  is  that  the  law  of  this  country,  ignoring  the 
dictates  of  sound  economy,  disregarding  the  well-con- 
sidered doctrines  and  judicial  decisions  of  a  leading 
commercial  country  Uke  Great  Britain,  forbids  its 
merchants  from  acting  in  harmony  with  one  another 
and  compels  them  to  compete  with  one  another  in  the 
dark  and  to  the  extent  of  relentless,  cut-throat  hostil- 
ity." 

SECRETARY  HOOVER'S  EFFORTS 

Now,  with  all  possible  respect  and  admiration  for  Mr. 
Secretary  Hoover,  whose  notable  achievements  during  the 
European  War  have  gained  for  him  lasting  fame,  I  venture  to 
point  out  that  Mr.  Hoover  is  laboring  under  the  same  misap- 
prehension with  respect  to  this  important  subject  as  Senator 
Edge  has  labored.  I  think  it  was  on  the  same  day  upon  which 
the  Senate  debated  the  Edge  Resolution,  namely,  April  17, 
1922,  that  Secretary  Hoover  met  in  his  office  in  Washington, 
by  his  own  invitation,  from  five  hundred  to  one  thousand  sec- 

28 


retaries  of  important  trade  associations  for  the  purpose  of 
discussing  the  means  whereby  the  efficiency  of  such  associa- 
tions could  be  promoted.  In  doing  this  Mr.  Hoover  did  a  most 
commendable  thing,  for  the  trade  associations  of  this  country 
— and  I  refer  to  those  whose  purposes  are  entirely  legitimate 
and  proper — have  been  and  are  laboring  under  great  disad- 
vantages— disadvantages  which  I  respectfully  believe  are  un- 
justly and  unnecessarily  placed  upon  thenn  by  the  laws  of  this 
land. 

I  respectfully  believe  that  just  as  Senator  Edge  has  over- 
looked the  fact  that  trade  associations  are  not  handicapped 
by  any  obscurity  in  the  law,  but  are  handicapped  by  definite 
barriers  created  by  the  law,  so,  also,  Mr.  Hoover  has  overlooked 
the  like  fact. 

I  believe  that  Mr.  Hoover  will  perform  a  service  to  his 
country  equal  in  its  importance  to  the  inestimably  valuable 
services  which  he  has  already  rendered,  if  he  will  boldly  state 
that  the  Sherman  Law  requires  amendment  for  the  reason 
that  it  forbids  cooperation  among  merchants  in  broad  fields 
where  cooperation  is  vitally  important;  that  no  other  country 
does  this;  that  other  countries  like  Great  Britain  have  forged 
far  ahead  of  us  in  the  world's  commerce ;  that  they  have  done  so 
largely  because  of  the  handicaps  placed  by  our  laws  upon  the 
trade  and  commerce  of  this  country;  that  these  laws  should 
be  amended  so  as  to  permit  such  cooperation  in  the  same 
manner  that  is  permitted  in  Great  Britain ;  that  such  permis- 
sion should  be  safeguarded  against  the  abuses  which  human 
cupidity  has  shown  will  arise,  by  the  creation  of  suitable  Gov- 
ernmental supervision  and  control  in  order  to  make  sure  that 
the  permission  thus  given  will  not  be  abused  by  utilizing  it 
for  the  purpose  of  practising  extortion  or  suppressing  compe- 
tition or  creating  monopoly. 

The  courts  of  England  have  found  no  difficulty  in  thus 
safeguarding  the  similar  liberty  given  by  the  laws  of  Great 
Britain  to  the  merchants  of  Great  Britain.  There  can  be  no 
reason  why  similar  safeguards  cannot  be  established  and  en- 
forced in  this  country,  to  the  end  that  the  merchants  of  this 
country  (I  speak  of  plain  business  units  and  not  of  great  mon- 
opolistic combinations)  may  be  liberated  from  the  obstacles 
and  barriers  imposed  upon  them  by  the  laws  of  this  country — 

29 


obstacles  and  barriers  which  check  their  initiative,  impair 
their  energies,  prevent  reasonable  and  sensible  cooperation  and 
drive  them,  against  their  will  and  against  their  interests,  into 
relentless  and  senseless  competition  with  one  another. 

THE  SUGGESTED  REMEDY 

I  believe  that  if  the  state  of  the  law  on  this  subject,  which 
has  resulted  in  such  an  anomalous  and  potentially  hurtful 
decision  as  that  which  was  rendered  in  the  Mennen  case,  and 
which  has  been  exemplified  in  the  Hardwood  Lumber  case, 
and  which  Senator  Edge  and  likewise  Secretary  Hoover  have 
by  mistaken  methods,  laudably  sought  to  correct — if  this  state 
of  the  law  of  this  country  were  plainly  set  forth  before  the 
people  of  this  country  and  before  the  Congress  of  this  country, 
a  just  understanding  of  the  subject  would  result,  and  a  just 
and  proper  discrimination  would  be  created  with  respect  to 
the  distinction  between  the  wrongful  practices  of  monopolistic 
combinations  and  the  beneficial  activities  arising  from  coopera- 
tive measures  on  the  part  of  plain  merchants — all  to  the  end 
that  the  incubus  and  burden  placed  upon  the  trade  and  com- 
merce of  this  country  shall  be  removed  and  our  merchants 
placed  upon  a  par  with  the  merchants  of  Great  Britain.  We 
have  all  recently  read  the  courageous  statement  made  by 
Senator  Borah,  of  Idaho,  a  man  of  statesmanlike  stature  and 
calibre.  He  had  the  courage,  a  few  weeks  ago,  to  say  on  the 
floor  of  the  Senate  that,  even  if  it  cost  him  his  re-election,  his 
conscience  compelled  him  to  declare  himself  in  opposition  to 
the  so-called  "Bonus  Bill",  because  he  thought  it  was  based 
upon  erroneous  financial,  economic  and  patriotic  foundations. 
I  venture  to  suggest  that,  if  statesmen  of  the  courage  and  fore- 
sight of  Senator  Edge  and  of  Senator  Borah  (others  also  could 
be  named),  could,  through  the  efforts  of  trade  associations 
such  as  yours,  acting  in  conjunction  with  other  like  important 
associations,  be  persuaded  to  take  up  this  subject  in  the  force- 
ful and  vigorous  manner  in  which  both  of  these  distinguished 
senators  have  taken  up  and  pressed  forward  other  important 
measures,  a  proper  understanding  of  the  question  would  result 
and,  remedial  legislation  would  be  adopted  whereby  the  diffi- 
culties which  I  have  mentioned  as  resting  upon  the  industries 
of  this  country  would  be  corrected  and  the  merchants  of  this 

30 


country  be  placed  upon  an  even  footing  with  the  merchants  of 
Great  Britain  and  of  other  countries,  all  to  the  lasting  benefit 
and  advancement  of  the  trade  and  commerce  of  the  United 
States. 

CONCLUSION 

I  beg  your  indulgence  for  a  final  word.  The  trade  and 
commerce  of  the  entire  world  has  been  shaken  to  its  founda- 
tions by  the  destructive  effects  of  the  European  War.  The 
countries  of  Europe  are,  for  the  most  part,  bankrupt.  The 
business  of  this  countrj^  during  the  years  1920-1921  underwent 
an  experience  the  like  of  which  has  not  been  seen  since  the 
Civil  War.  Bankruptcies  occurred  to  an  amazing  extent.  It 
is  generally  believed  that,  except  for  the  beneficial  influence  of 
the  Federal  Reserve  Law,  the  number  of  bankruptcies  would 
have  been  vastly  increased.  Many  business  concerns  which 
were  hot  driven  into  actual  bankruptcy,  have  to  a  large  extent 
been  so  imipaired  financially  that  they  are  barely  able  to  con- 
tinue. It  is  generally  believed  that  the  worst  of  this  condition 
has  passed  and  that  the  commerce  of  this  country  is  gradually 
regaining  its  vitality.  While  this  recovery  will  be  steadily 
progressive,  the  best  opinion  is  that  a  period  of  years  must 
elapse  before  the  commerce  of  this  country  will  regain  its 
normal  vigor  and  prosperity.  This  slowness  of  recovery  will 
be  attributable  largely  to  the  badly  crippled  condition  of  most 
of  the  European  countries,  especially  Russia  and  the  countries 
formerly  known  as  the  "Central  Empires". 

Under  these  circumstances  can  any  reasonable  man  doubt 
that  there  is  a  paramount  duty  upon  the  part  of  the  public 
of  this  country  and  upon  the  part  of  the  Congress  of  this  coun- 
try, to  view  the  problems  which  beset  the  business  men  of 
this  country,  with  a  sympathetic  and  a  helpful  mind — to  the 
end  that  the  business  of  this  country  may  be  placed  in  the 
most  advantageous  position  to  overcome  the  difficulties  which 
now  rest  upon  it  as  a  result  of  the  most  destructive  war  that 
human  history  has  recorded;  and  to  the  end  that  the  business 
of  this  country  may  be  equipped  to  regain  its  former  position 
of  vigor  and  prosperity  and  to  meet  the  competition  of  the 
business  men  of  other  countries  upon  an  equal  footing? 

31 


Finally,  if  "in  union  there  is  strength",  if  it  be  admitted 
that  cooperation  is  a  natural  human  tendency,  and  if  it  be 
admitted  that  the  laws  of  Great  Britain  have  found  a  way  by 
which  cooperation  among  its  merchants  is  permitted  without 
at  the  same  time  permitting  injury  to  the  Commonwealth,  why 
may  not  this  country  throw  off  the  burden  which  is  the  nega- 
tion of  all  of  the  foregoing  and  by  suitable  amendment  of  its 
laws  permlit  its  merchants  helpfully  to  cooperate  with  one 
another  and  no  longer  be  obliged,  against  their  will  and  against 
the  general  interests  of  the  Republic,  to-dfisd^oy  one  another 

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DAY    AND    TO    $t.OO    ON    THE    SEVENTH     DAY 
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